For those unfamiliar, Square is a brilliant app. You sign up on their site, you get a little card scanning doohickey in the mail, and you can now take credit cards, just like a major merchant. They take a small percentage off the top and everything else is yours.
It’s cheap, it’s simple, and a good chunk of the payments industry hates it. They hate it because the payments system in this country is kinda backwards technologically and ridiculously overpriced. Companies like Verifone require you to spend thousands on their systems, which they then charge you to use. Square, you just plug it into a $600 smartphone and you’re done.
So Starbucks deciding to go all Square-exclusive is pretty much a huge drop-kick to the junk for an entire segment of the payments industry.
Why should you care?
Until now Square has been the province of craft fairs and hipster coffee shops in San Francisco. Now it’s going to be in pretty much every urban area of America. It’s not just companies like Verifone that Starbucks has waved its coffee-scented dong at. Keep in mind that Google has a mobile payments system; Verizon is building one; Apple likely has one on the way; and even Facebook is getting into this area.
Basically, Starbucks just threw down. They’re getting a seat on Square’s board as part of this deal, so they’re invested in the company. Starbucks doesn’t just want to get rid of giant cash registers at their stores — it wants to make money every time you swipe a card.
Unlike a lot of the tech sector, this is a pretty serious deal. The business of running your credit card is a multi-billion dollar one. Many merchants will follow Starbucks’ lead. And now they’ve got an entire industry running scared.
Yeah, this’ll be… interesting.